EPA Pollution Rules Could be a Boon for Energy Efficiency

At first blush, it’s not entirely clear how the Environmental Protection Agency’s new Clean Power Plan to mandate reduced carbon emissions from power plants has anything to do with energy efficiency. But digging a little into the plan reveals that energy efficiency is one of its main pillars.

FirstFuel CEO Swap Shah said, “The impact of this legislation means a bunch of power plants are likely to go off-line. What is going to fill that gap? That’s where efficiency comes in.” Supply sources such as hydro and nuclear cost from 5 cents to 15 cents per kWh, said Shah, adding that efficiency has been shown to cost 2.5 cents per kWh.

According to a Lux Research blog, “Negawatts will prove to be the cheapest compliance.” Lux cites the American Council for an Energy Efficient Economy (ACEEE), which says saving electricity is considerably cheaper for a utility than producing it – as little as $0.028 per kWh, twice as cheap as coal.

Some states already have robust energy efficiency programs through their utilities. “Some states like California are already there,” said Shah. “It’s the states that haven’t done any of it that are going to have to come on board. Putting up a new power plant of any kind takes years; energy efficiency can be almost immediate.”

According to Lux Research, in addition to energy efficiency, three other technology sectors will get a boost from the Clean Power Plan:

Combined cycle gas turbines (CCGTs) will gain. Most states will target improvements to fossil fuel power plants. CCGTs, which use energy from burning natural gas, as well as steam generated from hot exhaust gas, will be in demand, given their higher efficiency.

Commercial and utility scale solar demand will rise in unexpected places. Subsidized internal rates of returns are already high for commercial and utility solar installations in states like California and Massachusetts, ranging from 10-15 percent, according to Lux. The new carbon emissions rules will likely open up hitherto unattractive markets such as Georgia and South Carolina.

“Clean coal” will get a new lease on life. The new rules will accelerate the development of second- and third-generation technologies for carbon capture and sequestration.